In early North American session on Tuesday, the Swiss franc strengthened against most major currencies. The franc rose to a 4-day high against the dollar, new record high against the euro and near a 2-week high against the pound. On the flip side, the franc weakened slightly from a 4-day high against the yen.
A report released today indicated that the CPI for Switzerland fell 0.1% in May – against expectations of a 0.1% increase. This was below prior month’s 0.9% increase in prices.
Annually, the CPI fell to 1.1% in May from a 1.4% year-on-year increase recorded prior month. Markets were expecting a smaller decline in annualized CPI to 1.2%.
Switzerland’s May jobless data and the SECO June 2010 economic forecast reports, which were released at 1:45 am ET failed to impact the franc.
Switzerland’s seasonally adjusted jobless rate in May was 4%, unchanged from April, latest report from the State Secretariat for Economic Affairs showed. Economists had forecast slight decrease to 3.9%.
Switzerland’s State Secretariat for Economic Affairs, or SECO raised its growth outlook for 2010, but lowered the forecast for next year.
The economy is now forecast to grow 1.8% in 2010, up from 1.4% estimated in March. For 2011, growth is seen at 1.6% instead of 2%. The expert group lowered the estimate for 2011 given the increase in external economic risks. According to SECO, Swiss export is set to slow with weak economic activity in the euro area.
The franc has been extending its previous session’s uptrend against the pound during Tuesday’s early New York session. Presently, the franc is trading near a 2-week high of 1.6634 against the pound. At yesterday’s close, the franc was worth 1.6844 against the pound.
The pound plunged against other major currencies earlier in the day as Fitch Ratings said Britain’s deficit challenge is “formidable.”
Fitch said today that the scale of the UK’s fiscal challenge is formidable and warrants a strong medium term consolidation strategy – including a faster pace of deficit reduction than set out in the April 2010 Budget.
The franc strengthened against its U.S. counterpart in early New York trading on Tuesday. The franc rose to a 4-day high of 1.1534 against the U.S. dollar at 9:10 am ET. As of now, the franc is worth 1.1549, compared to previous day’s closing quote of 1.1639.
Against the Japanese yen, the Swiss franc weakened slightly after hitting a 4-day high of 79.44 at 8:20 am ET. The franc-yen pair, which closed yesterday’s trading at 78.53, is now worth 79.16.
Japan’s current account, trade balance, corporate bankruptices and the leading index reports released today likely influenced the yen.
The Swiss franc registered a strong gains against the common currency of Europe during early New York session on Tuesday. At present, the franc is trading at a new record high of 1.3777 against the euro and this value may be compared to previous day’s close of 1.3868.
In economic news, Germany recorded a trade surplus of EUR 13.4 billion in April, the Federal Statistical Office said today. This follows a EUR 16.9 billion trade surplus in March. Economists had forecast a trade surplus of EUR 15 billion.
Separately, German’s Industrial output grew 0.9% in April from the previous month, data released by the Federal Ministry of Economics and Technology showed today. April’s growth was bigger than the expected 0.7%, but considerably smaller than the revised 4.3% growth seen in March.